Even with a surge in Iranian attacks on commercial ships, tankers are still moving crude oil through the Strait of Hormuz. The high freight rates offer a financial incentive that makes the risk worthwhile for many. The U. S. military's protective presence has been crucial, allowing crude flows to pick up again after they initially plummeted.
In March, the Iranian attacks caused crude exports to nosedive, dropping nearly 90% to 1.8 million barrels per day (bpd) from 16 million bpd in February. By October, exports had climbed back to nearly 11.1 million bpd, just slightly under September's levels, even as violence in the region escalated.
October was particularly rough, with attacks on at least 30 vessels and 16 seafarers injured. This was double the number of incidents seen in September. Jakob Larsen, chief safety and security officer at BIMCO, highlighted the constant threat ships face in the Persian Gulf.
Crude prices shot up over 13% this month, with the international Brent contract trading above $117 a barrel, nearing its wartime highs. The shipping industry has had to adjust, using a shuttle system to cut risks. Tankers load crude at Persian Gulf ports, sail through Hormuz with their transponders switched off, and then transfer cargo to waiting tankers in the Gulf of Oman for delivery to Asia.
This system works but is both costly and complex, needing more equipment and skilled crews. Around 20% of the world's supertanker fleet is now part of this operation. Tanker rates have soared, with costs hitting $931,000 per day by early October, up from $249,000 in September. Transportation costs per barrel have jumped to $21 from $6.50.
Mary Melton, a senior tanker analyst at Braemar, pointed out that Asian importers are feeling the pinch, with freight costs now making up 20% to 30% of the delivered crude price. To keep their market share, Gulf oil producers are bearing these costs and using their own tankers for the perilous trip through Hormuz.
But the sustainability of this shuttle system is shaky, heavily leaning on U. S. military air support. Larsen stressed that few shipowners would take the risk without protection from U. S. fighter jets and drones. The future of U. S. military involvement is uncertain, especially with potential political changes after the upcoming elections.
The U. S. military has advised vessels that don't need to transit the region to steer clear, citing the geopolitical climate. Ships are advised to avoid the area to prevent unnecessary delays.
